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// 5 Steps for Successful Schedule

Risk Analysis on CAPEX Projects

Tom Polen
Director, Professional Services
// Agenda

The 5 steps
1. Capturing uncertainty: calibrating the schedule
2. Identifying risk events: accounting for unknowns...
3. Alternate scenarios: risk adjusted schedules
4. Interpreting results: exposure & drivers
5. Risk Reduction: reducing risk exposure
Worked examples
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// Acumen Realistic Scheduling

Proven Project Analytics // S1 The Base

// S2 Critiqued

Project Management Software

// S3 Risk-Adjusted
Focus on analytics
Core Concepts // S4 Optimized
Project success requires a sound plan
Forecasting requires risk consideration // S5 Team-Aligned
2012 Planning Innovation of the Year
Product Offerings
2012 Inc.500 Award
Legacy Acumen Platform
20 years of project management software
Open Plan, Pertmaster, Fuse Risk Workshops
Conduct 50 risk workshops a year
Software Training

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// Project Risk Analysis

Science behind forecasting project completion
Doesnt account for scope uncertainty, unknowns
Project Risk Registers
Becoming more prevalent
Still isolated from true risk analysis
Risk Analysis
Gain true insight into schedule achievability
Pinpoints risk hotspots that will cause delay
Structured approach to reducing risk exposure

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// Why Bother with Risk Analysis?
Insight from Risk Analysis

Reveals hidden
critical paths
High Risk
Brings realism to
your forecast
Non-Critical Path poses
greatest risk to project contingency
Generates team
Project Completion
Critical Path doesnt
buy-in to the
impact project completion schedule
Helps with the
likes of IPA
Low Risk certification

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// How Does Risk Analysis Work?

Based on CPM
Accounts for variability in
the forecast
Schedule uncertainty
Risk events
Cost-impact of time
Monte Carlo simulation
Essentially a brute force
Highly prone to schedule
logic & inputs

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// Model Basis
Sound Schedule

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// Building a Risk Model
Alternate Approaches

Risk Load Critical Path Create a Summary Schedule

Pros Pros
Focuses the team in a Excellent means by which
workshop to facilitate a workshop
Based on actual schedule
Easy to risk load/build risk
Cons model
Assumes known critical Cons
Risk events make this Lose the logic
approach flawed integrity/calendars/detail
Dangerous approach to of a schedule
risk modeling Separate model to
Doesnt give true picture maintain to that of
of risk schedule

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// A More Effective Approach
Uncertainty Factor

Top-Down Categorization Graphical Approach

Retains true integrity of
the project schedule
Ensures whole
schedule is categorized
Very fast approach
Removes complexity
Eliminates crazy

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// Step 1: Capturing Uncertainty

Background Uncertainty Factor

variability regarding
Is the duration realistic?
Scope definition
Complexity of work
Past performance
Just plain wrong!
Not dates!
Dates are the results of
durations & logic
Old school approach
Min, most likely, max &
distribution type

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// Step 2: Capturing Risk Events

Risk Events Project Risk Register

Discrete event
2 key attributes

Threats & opportunities

Multiple states
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// Risk Register Calibration

One Size Doesnt Fit All Risk Register Calibration

# of categories
5X5 is standard
Define probability scale
Dont adopt HSE scale
Calibrate impacts
Relative or absolute?
Determine thresholds
Risk score is irrelevant

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// Mapping Risk Events
Tying it all Together

Risk Register Schedule

Risk Description Probability Impact
ID Transportatio
5d H: 10 d
0001 Hurricane 25% 10 days

0002 Labor Strike 50% 50%
30 days LS: 15 d


20 days LS: 10 d H: 10 d

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// Step 3: Risk Adjusted Schedules
Running the Simulation

Accounts for all

combinations of risk &
Is true to the logic of
the CPM schedule
Critical path may jump
Run enough iterations
until results dont
significantly vary

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// Step 4: Risk Exposure
P- Dates

Im 50% confident I will
finish on
Contingency Contingency
How much more/less
time do I need to finish
Confidence Level Confidence
What chance do I have of
hitting my finish date?
Risk Range Factor
Much better means of
determining risk exposure

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// Step 4: Risk Drivers

Risk Drivers Total Contribution

High-risk activities
Most impactful events
Traditional Reporting
% based
Uncertainty/Logic/ Risk
Event Contribution

Risk Contribution Factor

True measure of impact in
duration & cost!
Differentiates between
uncertainty & risks

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// Step 5: Risk Reduction
Scenario Comparison

Compare scenarios in
a single workbook:
Turn on or off risks Benefit of Mitigation
Benefit of mitigation
Uncertainty vs. Risk Events
Schedule A vs. Schedule B
Impact of schedule delay
on cost risk

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// Schedule Impact on Cost Risk
Cost Risk Distribution Schedule Risk Distribution

P100 360d (120%)

Deterministic: 300d

$90K $100K $130K P0 280d (93%)

Schedule Impact on Cost Risk Distribution

$84K $90K $100K $130K $156K

Developing Cost Risk
Accounting for Schedule-Risk

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